AI content floods OTT platforms, but monetization still a puzzle

While traditional TV channels are sticking to formats with proven audiences, digital-first brands are slowly experimenting, backing AI content with advertising. Entertainment industry experts say that sponsorship of AI (artificial intelligence) shows on digital platforms will depend on the nature of the content, how well it is received, and the broader pricing and positioning of the platform it is hosted on. In the long run, advertising seems a more viable revenue model for such content than paid subscriptions.

“We’re starting to see AI content surface more on YouTube and OTTs — short films, explainers, music videos, and now even reimagined classics like Mahabharat. Brands that want to be seen as modern and tech-forward are showing interest, especially on digital where younger audiences are more open to new formats," Rupali Chavan, senior vice-president and head of business at media agency Mudramax said. "On TV, advertisers are watching closely, but moving cautiously until audience acceptance becomes clearer," she said, adding that ad pricing for AI content remains unsettled.

On digital platforms, AI-led content is cheaper to produce but generates strong engagement. On TV, however, ad rates are still similar to regular shows as brands wait to see audience response.

Novelty of AI shows

Entertainment industry experts emphasize that viewers are intrigued by the novelty of AI shows, but aren't yet ready to pay for them. That makes it a great testing ground for advertisers, rather than subscription-driven platforms. This could change, though, and subscription model could become viable if AI can start to offer personalised storylines - letting each viewer experience a slightly different version of a story.

Neelesh Pednekar, co-founder and head of digital media at Social Pill, a marketing agency, said AI-generated content is still seen as experimental, so ad rates could be lower compared to regular, traditional content, at least initially. Advertisers are likely to experiment with CPM-based pricing (cost per thousand impressions), rather than flat sponsorship fees, as they are uncertain about the long-term audience behaviour. “However, as AI content becomes more mainstream, rates should eventually rise, especially for premium, AI-enhanced content that integrates more complex elements like personalization and predictive storytelling," Pednekar added.

In the long term, AI content will likely adopt a hybrid strategy that combines both ad-driven and subscription-based models, Pednekar believes.

For platforms like WAVES OTT, which will stream the AI-led Mahabharat, ad-driven revenue seems to be the natural starting point. As more brands line up to sponsor these shows, it will become easier for platforms to sustain the content creation costs and make it accessible to the masses.

For sponsoring AI content, tech companies like cloud services, GPU makers and SaaS platforms are a natural fit because it signals innovation, said Vishal Agrahari of BC Web Wise. Telecom and broadband brands align well with streaming and connectivity, while consumer brands use such spaces to try edgy creatives to grab attention.

To be sure, many feel AI-storytelling will simply thrive alongside other content such as films and influencer-driven content.

Harikrishnan Pillai, chief executive officer and co-founder, TheSmallBigIdea, a digital marketing agency, said AI content sponsorship would depend entirely on the nature of the content. If it’s designed for children, it will attract kids’ brands. If it’s more mature or action-oriented, brands that speak to older audiences will align better.

“Advertisers might be able to connect with the new generation when it comes to OTT platforms, and the old generation if it is broadcast on national TV – Doordarshan. Along with demographics, they might also be looking for geographics and generation-based viewership metrics to measure the sponsorship ROI (return on investment). Other than this, they might explore product placement, episodic or scene-based sponsorship models, especially for small brands and mid-range advertisers," said Sudarshan Sirsat, assistant professor - data science and technology, K J Somaiya Institute of Management, Mumbai.

Still, in the the short term, ad-supported model makes the most sense because AI content benefits from volume and constant iteration, according to Siddhant Sethi, senior manager, founder's office, White Rivers Media, a digital agency. “You learn what works by making more, faster. But as the quality curve improves and creators figure out how to use AI for depth and not just speed, subscription models will start to make sense. The tipping point will come when AI helps create something audiences feel is made for them, not just made efficiently. That is when people pay. Until then, advertisers will fund the learning phase, and that is not a bad place to be in," Sethi said.